These 4 Internet Stocks Keep Trending Higher

Investors keep chasing momentum at a breathtaking pace

As the oversold bounce in U.S. stocks continues and the Nasdaq has moved to 13-year highs in recent days, some key tech darlings are pushing higher on good momentum. These stocks remain on technically solid footing, although their steep immediate-term slopes are concerning.

I am looking at a number of Internet stocks with the hopes of conveying how much market participants are chasing momentum higher — which at the margin, at least near-term, will have negative implications sooner than later for the broader market.

All four of the following stocks are set to report earnings within the next three weeks, which must be kept in mind, as these names are particularly prone to develop large up or down gaps after their announcements:

Amazon

Amazon, while breaking to new year-to-date and all-time highs last week, has now rallied 8% in 11 trading sessions. Clearly, momentum is on the side of AMZN. However, I would caution chasing a stock higher after seven consecutive green daily candles.

Yelp

Yelp — which doesn’t trade on the Nasdaq, but nonetheless is joining these other Internet names — settled into a consolidation period by way of a bullish wedge formation following a nice, clean breakout in late June. The stock then staged a big 6% breakout on Tuesday, which might just give it enough momentum to move higher still. But note that the higher-probability trade has already come to pass with Tuesday’s breakout.

To chase or not to chase? That is the question here as we cross these choppy waters. YHOO and GOOG look particularly enticing here on the long side, though the risk/reward here is a very personal issue given that the earnings reports loom large.